Comcast de-escalates its battle with Netflix

Comcast and Level 3 Communications used all of 19 words to announce, via joint statement, a resolution to their two-year peering dispute, five of which comprised the sentence, “Details will not be released.”

That’s a far cry from the voluble, hammer-and-tong press releases they were hurling at each other back in 2010, after Level 3 picked up the Netflix account and started sending torrents of new web video traffic the ISP’s way. So it’s a fair bet that neither side is completely happy with the deal.

Both had reason to cool it, though. In Level 3’s case, the dispute itself prompted Netflix to start making its own arrangements for interconnecting with last-mile ISPs. While Netflix supported Level 3 publicly against Comcast, the CDN was inevitably becoming less critical to Netflix’s delivery plans. If Level 3 wants to hold onto the Netflix business it was eventually going to need to settle its dispute with the nation’s largest ISP.

Comcast had, if anything, even more incentive to put this one behind it. While Netflix poses a competitive challenge to cable ISPs, it’s no longer the only such challenge, and maybe not even the biggest. With Intel still planning to roll out its OTT, virtual pay-TV service later this year, and new reports that Apple and Google are in advanced talks with the networks (including, presumably, Comcast-owned NBC Universal) about similar services, Comcast could soon have much bigger battles on its hands, both with OTT competitors and with regulators, over access to content and to its pipes. It won’t help Comcast’s cause to go into those battles with accusations of anti-competitive behavior toward Netflix still echoing.

Comcast has also been rumored to be working on plans for its own OTT service that would allow it to expand beyond its franchised cable footprint should virtual pay-TV services gain traction. That would mean securing its own access to other service providers’ networks, for which getting cute with Level 3 over Netflix traffic would not be a good precedent.

The rapid growth in video consumption over the web has already resulted in grossly disproportionate traffic laws between network operators, which occasionally have erupted into peering disputes such as Comcast/Level 3 and Cogent/Verizon. But the problem may be about to get orders of magnitude worse.

Comcast, in other words, could soon have bigger fish to fry than Level 3.